Wages and Technological Change in Chess

Over the past several months, I’ve successfully managed to beat the two easiest difficulty settings on the default Chess app that came with my MacBook Air, but beyond that I don’t know much about the game. Kenneth Rogoff, however, has a fascinating column on the economics of professional chess which he says was basically ruined by the rise of chess-playing supercomputers. After Deep Blue beat Gary Kasparov “potential chess sponsors began to balk at paying millions of dollars to host championship matches between humans” so today top-ranked players earn less than their predecessors and “in real (inflation-adjusted) terms, second-tier players earn much less money from tournaments and exhibitions than they did in the 1970’s.”

But rather than total chess immiseration, there’s been a kind of broadening of the chess economic pyramid:

Nevertheless, a curious thing has happened: far more people make a living as professional chess players today than ever before. Thanks partly to the availability of computer programs and online matches, there has been a mini-boom in chess interest among young people in many countries.

Many parents see chess as an attractive alternative to mindless video games. A few countries, such as Armenia and Moldova, have actually legislated the teaching of chess in schools. As a result, thousands of players nowadays earn surprisingly good incomes teaching chess to children, whereas in the days before Deep Blue, only a few hundred players could truly make a living as professionals.

In many US cities, for example, good chess teachers earn upwards of $100-$150 per hour. Yesterday’s unemployed chess bum can bring in a six-figure income if he or she is willing to take on enough work. In fact, this is one example where technology might actually have contributed to equalizing incomes. Second-tier chess players who are good teachers often earn as much as top tournament players – or more.

That’s a great parable not only about how technological progress keeps not leading to mass obsolescence of human work, but also about the heavy role of contingency in shaping economic outcomes. People often focus on what you might call micro-luck, being in the right place at the right time, as a factor in economic success. But what Rogoff is pointing to here is the role of big picture luck. There was a particular point in time when being the best chess player in the world was more lucrative than it is in 2012. But 2012 is a better time to be a second-tier chess player with an aptitude for human engagement. These things about how a given person’s skills and dispositions happen to match up with the particular moment in technology matter at least as much as “how much skill” you have in some broad overall sense.